There’s no end in sight for the hard times for hard seltzers.
That’s the main takeaway from Boston Beer Company executives as they try to stem continued declines in the Truly brand.
In a Q4 earnings call yesterday, president and CEO David Burwick predicted the hard-seltzer category “will likely decline between 10% and 15%” in volume this year in the continuation of a long-running trend.
Despite a Truly ingredient reformulation introduced last October, data cited by Cowen & Company indicate that the brand “continued to underperform the category in Q4” with a sales decline roughly 13 percentage points “worse than the category.”
Burwick said the company is “disappointed that the reformulation of Truly has yet to improve trends” and is planning “a major refresh of the Truly brand in the second quarter of 2023 that includes new easy-to-navigate packaging.”
The upcoming package redesign will “present a cleaner, easy-to-shop look and forcefully communicate that we have a now more refreshing taste that includes real fruit juice. We sharpened our advertising communication in January to reinforce that point.
The new packaging and another ad campaign “will hit the market at the start of the second quarter.”
In a report following the earnings release, Bernstein analyst Nadine Sarwat wrote “there is no clear end in sight” to Truly’s declines.
“We worry that the problems the brand faces are too big to fix with changes in packaging. And even if these changes are somewhat successful, it will take months to see and investor patience is now thin.”
Burwick acknowledged a shakeout among hard-seltzer brands, but stressed Truly’s #2 market share behind White Claw.
“The next 46 brands equal the share that Truly has. So there's a lot of brands to steal share from, and a number of them will be going away.”
He predicted that Boston Beer’s category-leading Twisted Tea flavored malt beverage will gain 25% to 30% more shelf space once retailer shelf resets begin in March.